Real Estate Advisor: November 201811/10/2018
Know How To Identify Mortgage and Deed Scams
When you own a home or property, the last thing you want is to fall victim to a scam that leaves you broke or homeless. Unfortunately, there are several scams out there that target home buyers, sellers and owners alike. Scam artists can get away with a lot, especially when people are not aware of their tactics. Below you’ll find some of the most common mortgage and deed scams aimed at homeowners and ways to identify them.
Loan Modification Scams
When it comes to modifying your mortgage loan, be wary of anyone offering to do it for you that you don’t directly contact. Loan modification scams occur when a scammer offers to negotiate with a homeowner’s lender to lower the owner’s interest rate for a certain fee. Often, scammers will guarantee results, even going so far as to offer a “money-back guarantee.” The scam results in the homeowner paying the fee, only to receive no modification and s/he could possibly end up behind on mortgage payments and short on funds. You can find several websites that identify companies that have been or are being sued by the Federal Trade Commission for their loan modification businesses.
Signing over the deed of your property is a big thing, especially when it involves a scam that could cost you your home. Deed theft scams involve the fraudulent transfer of a home or property to a third party. Deed theft can come in different forms: homeowners get tricked into signing over their deed via a fake document, or homeowners may be aware they’re signing over the title of their property but only temporarily while they seek to refinance or take out a second mortgage. Owners are tricked into thinking it’s temporary, only to realize later that they’ve signed their home over for good. If you’re contemplating refinancing your mortgage, or anything else that may modify your current mortgage, make sure you ask questions and read the fine print before you sign anything.
Foreclosure and other financial issues related to home ownership can make people desperate when trying to avoid the worst scenario - losing one’s home. Impersonation scams occur when homeowners are tricked into thinking they’re hiring a company to prevent their homes from falling into foreclosure. Homeowners will pay the company hundreds of dollars a month to prevent foreclosure, only to find out later that their homes went into foreclosure and the company pocketed the cash. If you’re struggling with your mortgage payments, the best first step is to contact your lender and ask about a new repayment schedule. Be wary of companies touting something that may seem too good to be true.
There are predators in every industry, and the mortgage loan lending industry is no different. Mortgage loan scams abound, so be aware! Scammers will: advertise low-interest rates that aren’t actually available; 'forget' to inform buyers of high closing costs associated with their mortgage loans; steer buyers toward a more expensive loan with higher closing costs although they qualify for a loan with better terms; offer adjustable-rate mortgages but fail to inform buyers that the rates can increase or fluctuate in the future; and even offer negative-amortization loans (these loans are illegal in most of the U.S. and result in a loan’s principal balance increasing over time rather than decreasing). If you or someone you know is thinking of buying a home and looking at mortgages, know the signs of a possible scam.
Fake Lawsuits & Forensic Audit Scams
When you buy a home, you want to believe you’re not going to get taken advantage of, but many fall prey to dishonest people targeting homeowners. Fake lawsuits are those lawsuits that promise to ‘sue greedy banks’ on behalf of homeowners. Many times, the lawsuits are fake, and the homeowner can be out thousands of dollars and many month’s worth of time. Be wary of anyone touting a lawsuit, especially when your home or mortgage is concerned.
Another scam not easy to recognize is a forensic audit scam. This scam is focused on making the homeowner believe there are flaws in his or her mortgage document that could lead to an affordable modification or even nullify the mortgage loan. When it comes to both of this scam, check the background and references of anyone claiming to be a forensic loan "auditor," mortgage loan "auditor," or foreclosure prevention "auditor."
There will always be people looking to take advantage of hard working people, especially when money is on the line. If you’re a homeowner, don’t fall prey to a scam. Ask as many questions as possible. Research everything you can. Talk to your agent for more information. If you’re applying for a mortgage loan, get multiple quotes. And remember, if something seems too good to be true, it probably is.